2020 (2) TMI 513 - AT - Income Tax

Reopening of assessment u/s 147 - change of opinion - HELD THAT - No justification to interfere with the Order of the Ld. CIT(A). It is a fact that original assessment was completed under section 143(3)of the I.T. Act, 1961. The assessee furnished complete details before A.O. at original assessment stage which includes list of donors etc., for completion of the assessment under section 35(1)(ii) of the I.T. Act. No new material was brought on record at the time of reopening of the assessment. The A.O. merely on the basis of the material already on record recorded reasons for reopening of the assessment. There is no failure on the part of the assessee to produce complete details at the original assessment stage. The crux of the findings of the Ld. CIT(A) clearly show that Ld. CIT(A) was satisfied with the explanation of assessee that it is not a fit case of reopening of the assessment, though no specific operative finding have been given in this regard. Ultimately, the Ld. CIT(A) allowed the appeal of assessee. Since assessee has raised point of reopening of the assessment and find merit before the Ld. CIT(A), therefore, it would show that the grounds of appeal raised by the assessee for reopening of the assessment has also been allowed. The Revenue has taken adjournment on 08.07.2019 seeking time to file revised ground of appeal. Though the revised grounds are filed, but, again no ground have been taken to challenge the quashing of the reassessment proceedings in the matter. The assessee for abundant precaution has filed application under Rule 27 of the I.T. Rules. The crux of the findings of the Ld. CIT(A) clearly show that it is a case of mere change of opinion and that re-assessment have been made after four years from the end of the relevant assessment year, after passing of the original assessment order under section 143(3) of the I.T. Act, 1961. There is no failure on the part of assessee to disclose all the facts truly and correctly which are required for passing of the assessment order. Appeal of Revenue would not be maintainable because no ground have been raised by the Revenue challenging the reopening of the assessment, despite giving sufficient opportunity to the Revenue. Further there is no merit in the appeal of the Revenue because complete details required for completion of the assessment were filed at the time of original assessment. Therefore, the issue is covered by Judgment of Hon ble Supreme Court in the case of CIT vs., Nagpur Hotel Owners Association 2000 (12) TMI 99 - SUPREME COURT - Decided against revenue.

Summary

Issues:
Challenging the Order of the Ld. CIT(A) in allowing the appeal of assessee despite non-compliance with Rule 5D for Registration under section 35(1)(ii) of the I.T. Act, 1961.

Analysis:
1. Reopening of Assessment: The original assessment was completed under section 143(3) of the I.T. Act, 1961, with a NIL returned income. The A.O. reopened the assessment under section 147, citing non-compliance with Rule 5D as the assessee failed to furnish a certified copy of a separate statement of donations received and amount applied for scientific research. The assessee argued that all details were provided before the A.O. during the original assessment, which should suffice. The Ld. CIT(A) allowed the appeal, stating that the reassessment was unjustified as the required details were available during the original assessment, following the decision in CIT V Nagpur Hotel Owners' Association.

2. Compliance with Law: The assessee contended that they were duly approved under section 35(1)(ii) and had submitted complete information during the original assessment, including a list of donors and contributions. The A.O. reopened the assessment due to the absence of the audited statement of donations with the return of income. The Ld. CIT(A) found that the audited statement was available during the original assessment, leading to the deletion of the addition made during reassessment.

3. Change of Opinion: The assessee argued that since all necessary details were provided during the original assessment, the reassessment was merely a change of opinion and not based on new material. The Ld. CIT(A) agreed, emphasizing that if details required for assessment were available during the original assessment, there was no need for reassessment. The appeal of the assessee was allowed, and the addition made during reassessment was deleted.

4. Operative Order: The Ld. CIT(A) ruled in favor of the assessee, highlighting that the reassessment was unwarranted as the required details were already on record during the original assessment. The Revenue did not challenge the quashing of the reassessment proceedings despite filing revised grounds of appeal. The Ld. CIT(A) concluded that it was a case of a mere change of opinion, leading to the dismissal of the Revenue's appeal.

In conclusion, the appeal of the Revenue challenging the Ld. CIT(A)'s decision to allow the assessee's appeal was dismissed. The reassessment was deemed unjustified as all necessary details were provided during the original assessment, and no new material was introduced during the reassessment process. The decision was in line with the principles laid down by the Hon'ble Supreme Court, and the application of the assessee under Rule 27 of the I.T. Rules was allowed.